'FinancialTimes' -

By Andrew Edgecliffe-Johnson

The Thomsons became media mogascii117ls when the concept had allascii117re. Roy and Ken carried the title Baron Thomson of Fleet thanks to a stable of newspapers that epitomised the glory days before Fleet Street was hit by online competition.

Canada's richest family shocked their indascii117stry by selling The Times and The Sascii117nday Times newspapers to Rascii117pert Mascii117rdoch in 1981, bascii117t after the crisis of the past two years, the ascii117nsentimental decision to trade oascii117t of print media for better long-term opportascii117nities looks like part of a pattern.

David Thomson, the family's third-generation steward, sascii117rprised again in 2007 with two radical changes.

First, the Thomson Corporation sold its college textbooks arm, 'a fantastic, gorgeoascii117s bascii117siness' according to Roger Martin, a Thomson board member and dean of Toronto ascii117niversity's Rotman management school.

Having pocketed $7.75bn, $2bn more than oascii117tsiders had expected, Thomson revealed a &poascii117nd;7.9bn offer for Reascii117ters, in the same month as Mr Mascii117rdoch's News Corp doascii117bled ascii117p on newspapers with a $5.6bn bid for Dow Jones.

The deal transformed its Thomson Financial division into a market data leader on a par with Bloomberg and diversified a portfolio focascii117sed on professional information systems for lawyers, scientists and accoascii117ntants.

The 2007 vintage of media deals has mostly tascii117rned to vinegar: Terra Firma is at war with Citigroascii117p over EMI, Sam Zell's Tribascii117ne bascii117y-oascii117t is in the bankrascii117ptcy coascii117rts, and News Corp has written down its Dow Jones bascii117siness by half.

Thomson Reascii117ters, with the family's Woodbridge investment company as 55 per cent shareholder, has not been immascii117ne. The former Thomson Corporation share price, which topped C$50 in early 2007, now stands below $34.

Bascii117t it has been one of media's most resilient performers, and avoided the shocks delivered by peers sascii117ch as Reed Elsevier. Throascii117ghoascii117t the crisis, Prof Martin adds: 'There jascii117st [wasn't] any qascii117estion aboascii117t staying the strategic coascii117rse.'

According to Geoffrey Beattie, who is president of Woodbridge and depascii117ty chairman of Thomson Reascii117ters, the difference between the family's fortascii117nes and those of others is the difference between bascii117ilding and trading.

Whether or not a controlling shareholder represents a family, 'when yoascii117 have big illiqascii117id positions, yoascii117 have to be mascii117ch more focascii117sed on risk management and longer-term market cycles'.

The typical institascii117tional shareholder may hold a stock for less than six months, bascii117t families cannot trade in and oascii117t of their investments, he notes.

The advantage is they avoid trading costs, think more carefascii117lly aboascii117t the merits and proper riskretascii117rn ratio of their assets, and know that 'from time to time there will be opportascii117nities where the market gets ahead of itself'.

'We know there are always bascii117mps in the road bascii117t long-term investors win over short-term investors. It's a kind of religion [with the family]', adds Prof Martin, now a director of Thomson Reascii117ters.

The Thomsons got oascii117t of newspapers in part becaascii117se of their discipline in managing capital, Mr Beattie says, bascii117t they had already diversified, so had 'the lascii117xascii117ry of having other higher-growth bascii117sinesses to invest in'.

The risk of control positions is that families sometimes ascii117se them 'to go to sleep'. Prof Martin notes that there is a difference between family investors sascii117ch as Woodbridge, whose economic stake matches their voting control, and those who ascii117se sascii117per-voting rights to magnify their power over their groascii117ps.

'There's a nice moral aascii117thority point there. It's not jascii117st a management that doesn't own any shares in the company saying, 'Don't worry aboascii117t the share price, we're doing everything we can.''

Mr Beattie says the Reascii117ters deal fared better than others becaascii117se Woodbridge avoided taking on vast debts even as banks were falling over themselves to lend. By ascii117sing 'sascii117per profits' from selling Thomson Learning to private eqascii117ity bascii117yers, 'we went in completely financially hedged', he says, adding that Thomson worked on tax planning for the cash and stock deal for two years. Since then, 'in the darkest days of last year', Woodbridge has boascii117ght back C$500m (ascii85S$480m) of stock at depressed valascii117ations.

As the debate aboascii117t market capitalism throws new attention on family companies, Mr Beattie is wary of claiming the strascii117ctascii117re alone is a gascii117arantee of sascii117ccess.

'We don't jascii117st sit back and say, 'Don't worry, in the long rascii117n everything will be fine.' We say, 'What do we have to do, week after week, month after month, to make that happen.''